Choosing the best name for your new company, and how to protect it.
The two concerns for startup business names are the legal requirements, and the commercial use. We are talking about the name of your business, in this section, not your trademarks, or service marks, logos, or slogans. We are not attorneys, we do not give legal advice, so be sure to check with an attorney early on as you build your business. Trademark law protects product names, logos, trade names, even some slogans as trademarks or service marks. Copyright law protects works or art, fiction, movies, art, sculpture, and other creative works. Business law, however, does not fully guarantee you the exclusive use of your business name. To get close to exclusivity, you have to be first, you have to be national, and you have to be alert.
Owning and establishing a business name
The most common misunderstanding about business names is about registering, protecting, and reserving business names. You can’t reserve a business name completely, you can’t have exclusive use. Think of a business name as a lot like a personal name, in that the first or oldest John Smith cannot claim exclusive use of that name. He can’t make all the other John Smiths change their names. So too, the first Smith’s Restaurant can’t stop all other Smith Restaurants from using that same name. McDonald’s Hamburgers can’t make McDonald’s Hardware Store change its name, and McDonald’s Hardware Store in Manhattan can’t sue McDonald’s Hardware Store in San Francisco.
However, just as you have rights to your own identity, so does your company. One John Smith can sue another John Smith for using his identity, having bills sent to the wrong address, or purposely confusing people. McDonald’s Hamburgers can sue just about anybody trying to use McDonald’s for a business selling fast foods.
The confusion starts because business names are registered by different authorities in different places, and on different levels.
- The first and simplest business name is your own name, which might be enough for John Smith using Smith Consulting or hosting Smith’s Restaurant. This kind of business name normally requires no additional paperwork, although most business owners end up registering a name anyhow to establish their legal claim to it.
- The second normal common level of business names is called DBA (for “Doing Business As”) or Fictitious Business Name, which gives an individual the right to operate under a business name with signs, bank accounts, checks, and so on. These are generally registered and legalized by county governments within states. There might be a McDonald’s Hardware Store as a DBA in many counties within a given state, and across many different states. To register a business with a fictitious business name, call your county government for details. You can expect that you’ll have to visit an office in the county government, pay a fee of less than $100, and do some legal advertising, also less than $100, probably using forms you can fill out in the same office. Somebody will probably look up the registry to make sure that yours is the first business in the county with that name. Details will actually vary depending on which county you’re in.
- The third level is the corporation, regardless of its various corporate entities. Whether they are S Corporations, C Corporations, LLCs, or whatever, a corporation is registered at the state level and no two can have the exact same name in each state. However, there is no guarantee that there won’t be many businesses registered as McDonald’s Hardware Store in several counties in a state, and a corporation registered as McDonald’s Hardware Corporation. This kind of duplication happens. To establish a corporation, you can use national services such as The Company Corporation, or a local attorney. The corporate forms will go to the state, and details will depend on which state you’re in.
Even though duplicate business names are very possible, and quite common, you do still have the right to protect and defend you own business name, once you’ve built the business around it. The key to this is confusion and confusing identity. As we said above, one John Smith can sue another John Smith for purposely confusing their identities. So too, McDonald’s Hamburgers can and should sue anybody who starts a new restaurant named McDonald’s serving fast foods.
On this point, when one business is confused with another, being first matters. When somebody tries to establish a second McDonald’s Hardware where it would confuse people with the first, then the first McDonald’s has a legal right to prevent it. If the second store puts up a sign, then the first store should take quick legal action to stop it. The longer the first store ignores the second, the better the case of the second store. When the whole mess goes to court, the first one to use the name is likely to win, but if the first one sat quietly while the other one built the name, then there is more doubt. An existing business should always watch out for people using the same or confusingly similar names, because the sooner it complains, the better for its legal arguments.
Researching a name’s availability
So you see you can’t absolutely guarantee that nobody has the name you want, but you can at least try. The fastest and simplest way to start researching a name is to do an Internet search. Search about half a dozen of your favorite searchers and see whether or not the name you’re considering is already taken. You don’t want to name a business with a name that can cause problems later, because it confuses you with other businesses. That’s obvious, but how do you research a name to make sure there won’t be a conflict? There is no single sure way, but here are some suggestions:
- Search the Web. Start with your favorite searches and see whether anything turns up on the company name you’re considering. You can also go to the U.S. Patent and Trademark Office website, or KnowX.com or similar searcher sites.
- Search the Internet domain names. There are several searchers that offer access to the “whois” database of Internet sites. The most traditional site for this is the one at VeriSign, Inc. (formerly Network Solutions).
- See an attorney. Since you probably want to talk to an attorney about the correct business entities and other start-up matters, you may also ask your attorney about checking on business names. Generally you want to do your own check first to catch any obvious conflicts.
Ultimately, you really protect your business name only by using it. Corporations are registered by states, and factitious business names are registered in counties. Registering a name doesn’t really protect it though, because the same name could legally exist in many other states, many other counties.
You could be Acme Corporation in Illinois and legally own that corporation in that state, but there could be another Acme Corporation in every other state, and every one of them is legal until you win a lawsuit proving that they are trading on the commercial interests you own. When you really get protection is when you use that name, and therefore when you find somebody else using it you can prove that you had it first, so they are trading on your name. There are lots of McDonald’s restaurants around, and McDonald’s can’t stop them from using that name if they had it early enough, and especially if they aren’t pretending to be a fast food hamburger joint. The attempt to confuse is very important.
Choosing a business name
The choice of a business name is very important, worth taking time to develop. Don’t end up with a name that you can’t live with. Look for something that describes your business, is easy to explain, fits on the signs, and works.